New rules should keep oil cowboys out - Key

Prime Minister John Key says he is confident safety and environment rules being brought in to cover oil and gas exploration will keep out "cowboy "operators.

Speaking at an industry conference this morning Key said the country needed royalties from the sector to help maintain New Zealand's desire to spend like other first world countries.

In response to concerns about the danger of offshore drilling in particular, new health and safety and a new environment management regime are being brought in this year.

The industry still faced pressure from environmental groups.

"Some would go as far as halting exploration entirely. We believe if we don't know what's there how can we make informed decisions about managing resources for future generations."

The regulatory regime would be "world class" where business would be able to operate efficiently.

"This government is very clear, we won't let cowboys operate here in New Zealand."

He referred to New Zealand's pristine environment and said while there would always be risk but this could be balanced. The regulatory regime would be "world class" where business would be able to operate efficiently.

He said the public would judge the industry on how each operator behaved.

Key said oil exports were worth $1.8 billion last year and it was estimated new exploration could yield $13 billion in royalties annually.

The troubleshooter brought in to reform United States oil regulations following the Deepwater Horizon disaster says the government there and the industry was in a "trance" about the possibility of a blowout.

Michael R Bromwich introduced a raft of regulations following the Gulf of Mexico BP well blowout after being called in by President Barack Obama.

Before the disaster - which killed 11 workers and resulted in five million barrels of oil being spilled, nobody in industry or Government had considered the possibility of a deepwater blowout.

"Industry and the government was in a collective trance. It was truly a blind spot."

Security was tight at the SkyCity conference centre which has attracted around 500 oil and gas executives, engineers and officials from around New Zealand and from overseas. Last year protestors disrupted an industry conference in Wellington during a speech by former Energy Minister Phil Heatley.